BILL ANALYSIS Ó AB 2564 Page 1 Date of Hearing: May 11, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2564 (Cooper) - As Amended April 20, 2016 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires the California Air Resources Board (ARB), in consultation with the California Energy Commission (CEC), to adopt regulations to establish eligibility for the Clean Vehicle Rebate Project (CVRP) based on income levels. Specifically, this AB 2564 Page 2 bill: 1)Increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. Increased rebate amounts are available for fuel-cell electric vehicles, battery electric vehicles, and plug-in hybrid electric vehicles. 2)Limits CVRP eligibility to income of $125,000 for single filers, $170,000 for head of household, and $250,000 for joint filers. Excludes fuel cell electric vehicles from the income limit. 3)Requires outreach to low-income households and prioritizes rebate payments for low-income consumers. FISCAL EFFECT: 1)Increased initial costs of $150,000 to $250,000 (Air Quality Improvement Fund) per year for two years for ARB to adopt regulations to implement CVRP eligibility modifications and prioritizations. 2)Unknown, future and ongoing costs for ARB to update the CVRP program by regulation to reflect current market conditions. 3)Unknown, increased costs for ARB to provide outreach to low-income households. COMMENTS: AB 2564 Page 3 1)Purpose. This bill implements recommendations from an ARB discussion document. These recommendations include increasing awareness about CVRP by requiring outreach in disadvantaged communities and prioritizing rebates payments for low-income consumers. This bill goes beyond ARB recommendations and increases rebates for consumers with household incomes less than or equal to 300% of the federal poverty level. Additionally, this bill lowers the CVRP income limits to $125,000 single filer, $170,000 for head of household, and $250,000 for joint filers. 2)Background. In 2007, AB 118 established three new programs intended to promote vehicle and fuel technology that reduces air pollution and GHG emissions statewide. These programs are the Air Quality Improvement Program (AQIP), the Enhanced Fleet Modernization Program (EFMP) and the Alternative Renewable Fuel and Vehicle Technology Program (ARFVTP). AQIP provides financial incentives for public and private groups and individuals to adopt smog and diesel particulate pollution reducing technology that concurrently reduces GHG emissions. Two of AQIP's flagship projects, CVRP and the Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program (HVIP) represent the program's largest funding commitments. AQIP has also provided incentives for biofuels research, hybrid truck testing, lawn and garden equipment replacement, zero-emission all-terrain agricultural work vehicle rebates, advanced technology demonstration, and hybrid off-road equipment pilot projects. CVRP provides rebates for ZEV and NZEV, including plug-in hybrid vehicles, battery electric vehicles, fuel cell electric vehicles, and neighborhood electric vehicles. The demand for CVRP has steadily increased over time and AB 2564 Page 4 surpassed funding available through AB 118. Originally, the funding gap was covered with loans from various funds. In the 2014-15 Budget Act, $200 million was appropriated to AQIP from the GGRF. Last year, CVRP was one of the few non-continuously appropriated programs to receive an appropriation from GGRF. Despite that, CVRP may still run out of funding prior to the enactment of this year's budget, and the administrator may need to establish a wait list. To date, CVRP has spent over $300 million ($160 million from AB 32 cap-and-trade revenues) to provide over 142,000 rebates. ARB proposes to spend an additional $230 million on CVRP from the $500 million requested appropriation for low carbon transportation and fuels in the Governor's 2016-17 fiscal year budget. 3)Recent Legislation. As CVRP expenditures have grown, there have been concerns about the equity of the program and its cost effectiveness. These equity issues were recognized when the Legislature passed SB 1275 (de León), Chapter 530, Statutes of 2014, which established the Charge Ahead California Initiative to increase access to ZEVs and NZEVs for lower income Californians and disadvantaged communities. SB 1275 also required eligibility to be limited based on income. In response to SB 1275, ARB, on March 28, 2016, set an income cap of: a) $250,000 for single filers; b) $340,000 for head-of-household filers; and c) $500,000 for joint filers. Additionally, rebate amounts will be increased by $1,500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. This bill modifies both the income eligibility and rebate amounts established by SB 1275. AB 2564 Page 5 Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081